On 25 October 2023, the Queensland Parliament passed the Property Law Act 2023 (New Act), a significant legislative overhaul aimed at updating the property laws in Queensland. This legislation supersedes the Property Law Act 1974 (Old Act), which has been in effect for nearly fifty years.
Objective of the New Act
The anticipated outcome of the New Act is to simplify the property laws in Queensland, aligning them with the standards of other Australian States. Its primary goal is to improve transparency and safeguard consumer interests in property transactions. This document outlines the main objectives and stipulations of this new legal framework.
Key Changes
Important changes include:
- The introduction of a statutory seller disclosure scheme (Seller Disclosure Scheme)
- Rules relating to leases will be updated, introducing additional protections for current and former lessees
- Limitation periods for actions brought based on a deed is reduced from 12 years to 6 years
- The abolition of the rule against perpetuity for trusts over land in Queensland and the reduction of the statutory period of 10 years
- Various updates and simplifications of rules relating to instalment contracts, statutory easements under property contracts, and other matters.
Seller Disclosure Requirement
Traditionally in Queensland, buyers have the responsibility of conducting thorough research and investigations before entering into or purchasing, while sellers have had relatively minimal obligations in terms of disclosure.
The New Act brings about crucial modifications in seller disclosure requirements. Sellers of residential property, for instance, are now obligated to provide clear and pertinent information about the property to prospective buyers before entering into a contract, under the Seller Disclosure Scheme.
What does this apply to?
It applies to sales of all freehold land, including sales by auction, subject to several exemptions.
What needs to be disclosed?
Information that is relevant at the time of sale is to be prepared and signed by the seller. Disclosure Documents must encompass various certificates to affirm the accuracy of the provided information, such as title searches, registered plans, surveys, properties in community title schemes, details about the body corporate, community management statements (CMS), and by-laws not included in the CMS.
Furthermore, additional certificates, including adjudicator orders, pool compliance certificates, and notices from the Environmental Protection Agency and Queensland Building and Construction Commission, must be included in the disclosure statement. The legislation permits the provision of these documents in both physical and electronic formats, ensuring flexibility and convenience.
What happens if this is not complied with?
The buyer has the right to terminate the contract at any time before settlement if the seller fails to provide any of the Disclosure Documents at the relevant time or provides Disclosure Documents that are inaccurate or incomplete regarding a material matter.
Exceptions to the Seller Disclosure Scheme
Exceptions to the Seller Disclosure Scheme include:
- Sales between related parties where the buyer voluntarily waives the requirement
- Sales between co-owners or neighbouring landowners when the purpose is a boundary realignment
- Sales mandated by a court order
- Transfers to perpetual leaseholders or beneficiaries under a will or due to the death of the seller
- Contracts stemming from an option where the seller previously disclosed information within 12 months when taking up the option. This exemption applies only when the buyer is given the right to withdraw or if the terms of the option are the same as the sale by sale. If a nominee is appointed under an option, separate disclosure to the nominee’s option needs to be satisfied
- When buying a lot in a subdivision (including GST) where the buyer consents to buy the replication
- Sales where an established City Council or another local government to recover overdue rates or sale of the scheme, buyer is notified of a change to the disclosure statement and required certificates
- Sales by a developer where the buyer has the property’s status for at least three years and has complied with these requirements unless designated to provide the certificate as a non-residential certificate
- Sales to buyers who also publicly listed corporations for subsidiaries of publicly listed corporations which they state, statutory bodies, or constituting authorities under the Statutory Instruments Act 1971 (Qld).
Impact on Leases
The New Act introduces a set of reforms with the objective of simplifying, rationalising, and improving the legal framework for tenants, landlords, and all parties engaged in leasing agreements.
Assignor Liability
A notable modification revolves around the responsibility of the Assignor under the original lease and their guarantee in the event where someone else subsequently takes over the lease. Previously, under common law, if Tenant A transferred their lease to Tenant B, who then passed it to Tenant C, Tenant A might remain liable for any lease obligations committed by Tenant C. The New Act adjusts this scenario, eliminating the ongoing responsibility for breaches by any subsequent assignee, irrespective of prior agreements. Nevertheless, Tenant A and their guarantors remain responsible for breaches by Tenant B unless explicitly released from such obligations.
Consent to Assignment of Lease
The New Act changes the requirements for obtaining consent for lease assignments or other transactions involving the lease of leased premises. These adjustments serve to ensure that landlords cannot unreasonably refuse consent. Alongside this provision, the New Act specifies:
- A statutory timeframe within which lessors must communicate their decision regarding consent, typically one month after receiving comprehensive details of the assignment
- A granting lessee the right to pursue damages through the court in instances where a landlord fails to provide consent decisions, unreasonably withhold consent, or impose conditions that are deemed unreasonable, or onerous.
Time Limits – Deeds Related Actions
The limitation period for actions based on a deed will be reduced from 12 years to 6 years.
This change creates consistency in the limitation period for other commercial agreements and enhances legal clarity and fairness.
Trusts and Abolition of Rule Against Perpetuities
The common law rule against perpetuities stipulates that an interest in property must be established within 2 years after the death of a person alive at the time the interest was established.
The New Act modifies this rule to allow the option to set a perpetuity period of up to 80 years (in the case of a trust, this implies that property can be held in trust for a maximum of 80 years after the creation of the trust).
The New Act introduces a further perpetuity approach by establishing a perpetuity period of 125 years after the death of a person alive at the time the interest was established. The trustee can extend it to 125 years. In cases where the trustee lacks the power to alter the vesting date, all living beneficiaries under that can collectively execute a deed to modify the vesting date and set it at 125 years.
It is essential to exercise caution and thoroughly evaluate any contractual text or any implications when contemplating modifications to existing trust arrangements in light of these amendments.
Enforceability of Easement Covenants
The existing legal framework states that a positive covenant within an easement is not legally enforceable against future property owners unless they explicitly consent to it.
To address this, a new provision, section 65, has been incorporated into the Act. The new section renders covenants in registered easements, whether they are positive or negative and pertain to owners, as enforceable. Building, or maintaining, binding arrangements unless explicitly accepted as servient. Section 65 is applicable to all easements, irrespective of their creation or registration timeline, thereby enhancing the enforceability of these covenants on subsequent landowners.
Conclusion
The enactment of the Property Law Act 2023 (QLD) marks a substantial step forward in the modernisation of property laws in Queensland. Through the implementation of seller disclosure requirements and the creation of explicit protections for leases, the New Act seeks to foster a property market marked by openness and consumer-oriented practices.
Undoubtedly, these statutory provisions represent a significant advancement in real estate transactions within the State, potentially yielding favourable outcomes for both buyers and sellers in the real estate arena.
If you have any questions regarding this article, please contact a member of our team.
Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
